Question

Which of the following are tax planning methods used in income-shifting strategies? (Check all that apply.)

A) Gifting assets to family members
B) Shifting income from a high-tax-rate taxpayer to a lower-tax-rate taxpayer
C) Accelerating the recognition of income
D) Utilizing tax credits

Answer 1

Tax planning methods used in income-shifting strategies include Earned Income Tax Credit (EITC), Temporary Assistance for Needy Families (TANF), and Microcredit.

Step-by-step explanation:

Tax planning methods used in income-shifting strategies include:

• Earned Income Tax Credit (EITC): EITC is a tax credit provided to low and moderate-income working individuals and families. It reduces the amount of tax they owe and may result in a refund.
• Temporary Assistance for Needy Families (TANF): TANF provides cash assistance and supportive services to low-income families. It can help to reduce the tax liability and increase the refund.
• Microcredit: Microcredit refers to small loans provided to low-income individuals or entrepreneurs to start or expand their businesses. It can help in generating income and reducing tax liability.